Business & finance homework | ECO204 | NATIONAL UNIVERSITY

1. Unemployment: (15 points)

Part I: Country A – Labor Force Participation

A country, Country A, has a civilian population of 300 million. Of these:

· 80 million are under 16 years old or in institutions (e.g., prisons, long-term care facilities) · 48 million adults do not want to work and are not looking for a job · 160 million people are employed · 12 million people are unemployed and actively seeking work

Answer the following:

(a) How many people are not in the labor force in Country A? (3 points) (b) What is the size of the labor force in Country A? (3 points) ------------------------------------------------------------------------------------------------------ Part II: Country B – Unemployment Types and Rates

A different country, Country B, has the following labor market data:

· Labor force: 200 million · Unemployed: 14 million · Frictionally unemployed: 3 million · Structurally unemployed: 5 million

Answer the following:

(c) What is the actual (total) unemployment rate in Country B? (2 points) (d) What is the natural rate of unemployment in Country B? (2 points) (e) What is the cyclical unemployment rate in Country B? (3 points) f) What might the unemployment data suggest about the overall state of the economy in Country B? Explain briefly. (2 point)